$80bn waiting to be saved: Why firms need to optimise their cloud spend
The popularity of cloud technology has risen rapidly, surging from a small back-office concern to an integral part of business strategy. This demand is showing no signs of stopping with the public cloud market set to exceed $330bn in 2022. And while companies continue to rush towards this technology, few have worked out how to use it efficiently, as 35% of cloud spend remains unused and wasted, the equivalent of $80bn.
The biggest issue, and why businesses end up paying far too much from day one, is the ‘like-for-like’ approach that most firms use for cloud migration. To calculate cloud spend, firms are taking a simple inventory of all their virtual machines and directly transferring it to the cloud. This fails to appreciate the differences between fixed estates in the cloud, with the latter being flexible and scalable, meaning you don’t need to build in extra capacity from the get-go.
Fortunately, there is a solution.
From the start firms need to be utilising the right software monitoring solution, which will allow firms to get accurate oversight of their IT estate. The better the view you have of your existing system, the more efficient your transition to the cloud will be. Then, instead of ‘like-for-like’ firms need to do a comprehensive stocktake of the demand profile of all business workloads – ‘right sizing.’ They can do this by analysing which machines can be downsized from core count, memory and allocated storage, and which can be switched off all together. Getting this right is essential as even one size too big means firms could be paying double what they need to.
The second central tenet is right-buying. This is an analysis and optimisation of each instance (whether this is a physical or virtual machine) and the best way to buy it. This involves a comparison of multiple cloud providers and the on-premise estate, allowing firms to select the best purchase plan for the best price based on their use-profile.
There are optimisation tools that package both of these processes up in one solution. Our Cloud Cost Optimisation feature is centred around these two processes and enables customers to optimise cloud spend by recommending improvements to a production estate and identifying wasted capacity and therefore money. This is also combined with an interface that presents all this data in an easy-to-visualise way. Read more here.
Following cloud migration, firms must ensure that their cloud spend remains efficient. This means that they need to be able to predict their usage requirements, to ensure they match their cloud capacity accordingly. Firms can do this by using scenario modelling to predict future demand and plan when they need extra cloud capacity and when they can spin capacity down.
There was a time when reducing Cloud spend might have been a nice-to-have, but in these uncertain times it has become a necessity. In the world of Cloud, information is power – firms need the right tools in order to gather information from the entire estate to make sure they are buying the right space, for the right price. Done right, many firms will be able to return that 35% of wasted cloud spend to the wider business to make improvements and deliver returns.
